NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

STARFUELS INC.

EXCHANGE RULES:

RULE 526. – BLOCK TRADES

The Exchange shall designate the products in which block trades shall be permitted and determine the minimum quantity thresholds for such transactions. The following shall govern block trades:

F. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.

RULE 536.E. NEGOTIATED TRADES

536.E. Negotiated Trades At the time of execution, every order received from a customer for execution pursuant to Rule 526 (“Block Trades”) … must be in the form of a written or electronic record and include an electronic timestamp reflecting the date and time such order was received, and must identify the specific account(s) for which the order was placed. Such record shall also include an electronic timestamp reflecting the date and time such order was modified, returned, confirmed or cancelled.

RULE 432. GENERAL OFFENSES (in part)

It shall be an offense

W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

CME GROUP MARKET REGULATION ADVISORY NOTICE RA1906-5

Block Trade Submission Requirements to CME Clearing (Section 7 In Part)

The execution time of a block trade is the time that the parties agree to the trade. Market participants must accurately report the execution time of the block trade.

Block Trade Recordkeeping (Section 8)

Complete order records for block trades must be created and maintained pursuant to Rule 536 and CFTC Regulations. Additionally, the time of execution of the block trade must also be recorded for all block trades.

FINDINGS:

Pursuant to an offer of settlement that Starfuels Inc. (“Starfuels”) presented at a hearing on November 18, 2020, in which Starfuels neither admitted nor denied the findings, conclusions or any rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that during the month of July 2019, Starfuels submitted numerous block trades in various Energy Platts futures contracts with inaccurate execution times.

The Panel also found that Starfuels also failed to correctly execute, record and report the block trades consummated by its brokers. Specifically, Starfuels brokered a number of block trades by having the counterparties agree to all of the details of a block trade except for the price and reported the block trade later in the day using a price derived from the settlement price. Once the price was known, Starfuels did not confirm whether the counterparties were still willing to accept the block trade at the determined price.

Additionally, Starfuels failed to properly advise and train its brokers as to relevant Exchange rules and Market Regulation Advisory Notices (“MRANs”) in a manner sufficient to ensure compliance with the same.

The Panel found that as a result of the foregoing, Starfuels violated NYMEX Rules 526.F (“Block Trades”). 536.E. (“Negotiated Trades”) and 432.W. (“General Offenses – Failure to Supervise”).

PENALTY:

In accordance with the settlement offer, the Panel ordered Starfuels to pay a fine to the Exchange in the amount of $40,000.